Each week we highlight the best insights and analysis from top business and self-improvement books.
The Intelligent Investor by Benjamin Graham
By: Benjamin Graham31-MINUTE AUDIO / 4,156 WORDS (8 PAGES)
SYNOPSISThis book will not teach you how to beat the market. However, it will teach you how to reduce risk, protect your capital from loss and reliably generate sustainable returns over the long run. Warren Buffett calls the Intelligent Investor "by far the best book on investing ever written."
Benjamin's proven value investing approach replaces risky attempts to project future share prices with sound investments based on the underlying value of the company's tangible assets.
The Intelligent Investor by Benjamin Graham gives you everything you need to equip yourself with the investor's mindset necessary to avoid the panic of market fluctuations that plague the ordinary investor. Don’t be ordinary. Be intelligent.
TOP 20 INSIGHTSThere are two kinds of investors. Defensive investors aim to protect their capital from losses, generate decent returns and minimize frequent decisions. Enterprising investors devote most of their time to manage their portfolios actively. An enterprising investor does not take more risks than a defensive investor but invests more in stock selection.
Part-time investors should stick to defensive investment strategies. Defensive investors can achieve a decent result with minimum effort and capability. However, even a marginal improvement from this result is challenging and requires extraordinary knowledge and skill. An attempt to outsmart the market by spending a little extra time and effort will primarily result in below-average gains.
Confusing speculation with investment can be a costly mistake. Speculators buy hot stocks based on future growth prospects. In contrast, investment is made on a thorough analysis of the underlying business to ensure the safety of principal and adequate — but not extraordinary — gain. Invest in a stock only when you can comfortably own it without following its daily share price.
If you cannot resist the urge to bet on the next big growth stock, set strict limits on speculation. Keep a separate speculative account with less than 10% of your capital for speculative activities. Never mix money from the investment account and speculation account.
It's a risky idea to speculate on high-growth industries, and high-growth stocks are a risky idea. The growth prospects for a business do not necessarily result in profits for investors. Because these stocks are often overpriced, growth may not result in proportional returns. Only eight of the largest 150 companies on the Fortune 500 list managed to grow earnings by at least 15% over two decades.
Graham strongly urges investors to stay away from Initial Public Offerings. IPOs often happen in bull markets and lead to inflated valuations. When the bear market begi
Your Strategy Needs a Strategy
By: Martin Reeves32-MINUTE AUDIO / 3,857 WORDS (15 PAGES)
SYNOPSISWe live in a business world that is in constant flux. But when you learn and understand the five strategy archetypes and how to execute them, you will master your journey through this turbulent land of opportunity.
In Your Strategy Needs a Strategy, authors Martin Reeves, Knut Haanæs, and Janmejaya Sinha explain how to navigate these various approaches and avoid common pitfalls.
With a solid foundation of the five archetypal approaches, create a "pyramid" of strategy application. Combine multiple approaches and top the process off with solid leadership.
TOP 20 INSIGHTSA classical strategy approach, i.e., "be the biggest," should be deployed in relatively stable and predictable markets with established competition. Homogenous business models are more likely to experience modest growth rates and few surprises or disruption. Most traditional businesses fall under this category but beware of the assumption that it applies to yours.
The turbulence of business return on sales has more than doubled since 1950, which has forced classical industries to re-think their approach. Analysis by BCG Strategy found that the top three market-share leaders' probability of also being the top three profitability leaders declined from 35% in 1955 to just 7% in 2013.
An author-created survey found that nearly 90% of firms intended to employ a classical approach of detailed forecasts, and 80% translate those into long-term plans. Classical shouldn't mean mechanical or overly complex, however. Use familiar tools to achieve new, uncomfortable, and surprising insights.
Emphasize scale if your business is among the top three in your industry. If not, focus on differentiation, especially if your targeted niche segment is sizeable. Products or services must be distinct and valuable to succeed. DHL invested $10 billion to enter the U.S. express freight business but struggled to compete until it focused on international delivery.
If you choose a classical strategy, you still need to adapt to slow but significant changes. Electrical utilities have deviated little over the last century but have begun to diversify into alternative energy sources. UPS employed a classical strategy in 1907 then adapted to e-commerce when it invested billions per year on IT systems.
Businesses should apply the adaptive strategy, i.e., "be fast," only when it operates in an environment that is both hard to predict and hard to shape. Examples include software, fashion, and any product that relies on minerals or resources, such as semiconductors.
Adaptive business models yield more consistent performance if you continually invest a portion of resources into the exploration of new options or adaptation. A simulation of 30 adaptive strategies executed within a turbulent environment showed more frequent but smaller drops in profit compared to a classical strategy.
Continually refresh your data on external change and have the analytic capabilities to uncover hidden patterns. Progressive Insurance uses its Snapshot program to track and analyze driver patterns, which creates real-time risk profiles for each customer. CEO Glenn Renwick called Snapshot one of the most important things he’d seen in his career.
An adaptive strategy can only succeed if you refuse to get comfortable. This attitude underpins
Post-Corona: From Crisis to Opportunity
By: Scott Galloway32-MINUTE AUDIO / 3,857 WORDS (15 PAGES)
SYNOPSISWhat will the world of business look like after the coronavirus pandemic? The pandemic will accelerate every trend by a decade and redefine entire industries. Foundational sectors like healthcare, education and transportation are on the verge of unprecedented disruption as the market rewards innovators like Tesla with massive valuations.
Scott Galloway, a professor at NYU Stern School of Business, presents a clear-eyed overview of this great transformation, the new business environment, Big Tech’s dominance, and who stands to win and lose in this new age.
TOP 20 INSIGHTSEcommerce's share of U.S. retail, which had been growing by one percent every year, jumped by 11% within eight weeks of the pandemic hitting the United States. The strong performance of big companies fueled the U.S. stock market recovery. However, medium companies declined, and smaller companies got hit the hardest. While the S&P registered growth by mid-July 2020, mid-caps were down 10%, and small caps dropped by 15%. Brands that were already going down, like JCPenny and Neiman Marcus, got hit the hardest.
A large portion of the stimulus capital that entered U.S. capital markets went towards innovative firms. Tesla's valuation exceeds Toyota, Daimler, Volkswagen and Honda combined, even though it will manufacture only 400,000 cars rather than 26 million cars manufactured by the other four in 2020.
Sectors will witness market consolidation around innovators or market giants with solid balance sheets, high-value assets, cheap debt and low fixed costs. Firms like Costco, Honeywell and Johnson and & Johnson, which have $11 billion, $15 billion and nearly $20 billion respectively in their bank accounts, will have their pick of assets and customers when weaker competitors shut down.
A company's survival depends on the sector's health and its position within it. Non-dominant companies within weak sectors must leverage current assets to pivot to new lines of business. Thryv Holdings, America's largest yellow pages company, used its relationship with thousands of small businesses to pivot into Customer Relationship Management.
Companies must become capital-light and move to a variable cost structure by leveraging other people's assets. Uber rents space in other people's cars driven by non-employees. So when revenue went to zero during the pandemic, Uber's costs went down by 60- 80%. Despite the hospitality industry taking a huge hit, Airbnb is well-positioned to take a more significant industry share.
82% of corporate leaders plan to allow partial remote work, and 47% intend to offer full-time remote work in their organizations. But remote work has its share of drawbacks. Serendipity is key to
Algorithms to Live By: The Computer Science of Human Decisions
By: Brian Christian and Tom Griffiths24-MINUTE AUDIO / 3046 WORDS (13 PAGES)
SYNOPSISCan computer science teach us the secrets of life? Perhaps not, but it can shed light on how certain everyday processes work and how to exploit them. Algorithms are everywhere, from following a recipe to the order in which you sort your email.
In Algorithms to Live By, programmer and researcher Brian Christian and psychology and cognitive science professor at UC Berkeley Tom Griffiths share the many ways that algorithms shape everything from the way we remember things to how we make big and small decisions.
TOP 20 INSIGHTSThe "37% rule" refers to a series of steps, or algorithms, that someone must follow to make the best decision within a set amount of time. Someone allots 37% of their time to research before they make a decision, then commits to the very next "best choice" they find.
The "explore/exploit" trade-off refers to the need to balance the tried and tested with the new and risky. The payoff of this algorithm depends entirely on how much time you have to make decisions. People are more likely to visit their favorite restaurant on their last night in town than risk something new.
Developed in 1952 by mathematician Herbert Robins, the "Win-Stay, Lose-Shift" algorithm uses slot machines as a metaphor. Choose a machine at random and play it until you lose. Then switch to another machine; this method was proven to be more reliable than chance.
A psychology study found that given choices, people often "over explore" rather than exploit a win. Given 15 opportunities to choose which slot machine would win, 47% used Win-Stay, Lose-Shift strategies, and 22% chose machines randomly instead of staying with a machine that paid out.
Hollywood is a prime example of the exploit tactic. The number of movie sequels has steadily increased over the last decade. In both 2013 and 2014, seven of the Top 10 films were either sequels or prequels. The trend is likely to change if new movie ideas draw more box office dollars.
The A/B test is similar to the two slot machine scenario in that you stick with the option that performs best. More than 90% of Google's $50 million in annual revenue is from paid advertisements, which means that explore/exploit algorithms power a large portion of the internet.
The Gittins Index provides a framework of odds that assume you have an indefinite amount of time to achieve the best payoff, but the chances reduce the longer you wait. For example: choose a slot machine with a track record of one-to-one wins/losses (50%) over the machine that has won nine out of 18 times.
"Upper Confidence Bound" algorithms offer more room for discovery than the "Win-Stay, Lose-Shift" method. This algorithm assigns a value based on what "could be" based on the information available. A new restaurant has a 50/50 chance to provide a good experience because you have never been there.
The "Shortest Processing Time" algorithm requires that you complete the quickest tasks first. Divide the importance of the task by how long it will take. Onl
Elon Musk: Tesla, SpaceX and the Quest for a Fantastic Future
By: Ashlee Vance26-MINUTE AUDIO / 3,700 WORDS (16 PAGES)
SYNOPSISOn January 7, 2021, Musk was named the richest person in the world with a net worth of $188.5 billion. Remarkably, Musk not only topped Jeff Bezos, but accrued $150 billion of that net worth in the prior 12 months alone. Experts described it as the fastest bout of wealth creation in history.
In Elon Musk, the South Africa-born inventor opens up to writer and reporter Ashlee Vance about the rocky road he traveled to become America’s most innovative modern industrialist.
TOP 20 INSIGHTSMusk has always been a man with a mission and a higher calling. In college, he became convinced there were three areas that would change the future of the world for good: the internet, sustainable energy and the ability to live outside our planet. Musk came to see man’s fate in the universe as a personal obligation. If that meant man should pursue cleaner energy technology or build spaceships to extend the human species’ reach, then so be it. Musk had a deep commitment to explore Mars and he would find a way to make it happen.
Vance believes Musk will leave an indelible mark on the world through his transformative work. Vance asserts that Musk has what so many in Silicon Valley lack – a meaningful world view. “He is less a CEO chasing riches than a general marshaling troops to secure victory. Where Mark Zuckerberg wants to help you share baby photos, Musk wants to [...] save the human race from self-imposed or accidental annihilation,” Vance writes.
When the dot-com bubble burst in 2007, it left behind a slew of empty-handed investors and mediocre companies. Silicon Valley sank into a deep depression. Although Google emerged and began to thrive in 2002, and Apple soared when it launched the iPhone in 2007, these startups were anomalies. And the hottest new things – Facebook and Twitter – looked nothing like their predecessors Intel, Hewlett-Packard or Sun Microsystems, all of which employed thousands of people to make physical products. Silicon Valley had morphed into a play-it-safe haven as countless entrepreneurs and dot-com strivers chased easier money and churned out simple apps and advertisements.
By all accounts, Musk should have been part of the malaise that washed over Silicon Valley. Instead, he founded his first startup in 1995, Zip2, bought by Compaq in 1999 for $307 million. He took the $22 million he made on the deal and invested all of it in his next start-up, X.
Steve Jobs: The Exclusive Biography
By: Walter Isaacson28-MINUTE AUDIO / 3,500 WORDS (16 PAGES)
SYNOPSISAs the icon of innovation and applied imagination, Steve Jobs revolutionized six industries and made Apple the most valuable company in the world.
But what principles made him one of the greatest inventors and product visionaries of the 21st century?
Biographer Walter Isaacson raises the curtain on this secret. Based on more than 40 interviews with Jobs, as well as insights from 100 family members, friends, rivals and peers, Isaacson’s book is a comprehensive study of a man who changed history.
TOP 20 INSIGHTSComputers in the 70s were for business use and did not have screens and keyboards. Steve Wozniak and Jobs started Apple to market a personal computer that came with a keyboard and screen. Apple II was a commercial success and launched the Personal Computing revolution. In 1980 Apple was valued at $1.79 billion, and Jobs was worth $256 million at only 25.
The Apple Marketing Philosophy, written by Mike Markkula, shaped Jobs's approach to product design and branding. It had three principles: empathy, focus and impute. Empathy meant to deeply understand customer feelings. Focus was to eliminate unimportant opportunities and excel in a few things. Impute meant that people judge a product or company by its cover.
Jobs recruited people with a passion for product. He would show them the Macintosh prototype, and if they got excited and started to use it, he would hire them.
Jobs ruthlessly fired B players. "The Macintosh experience taught me that A players like to work only with other A players, which means you can't indulge B players," he used to say.
During his second stint, Jobs became a manager. He displayed a pragmatic, detail-oriented approach. This was visible in his decision to completely outsource his passion, hardware manufacturing. As Board Member Ed Wollard said, "He became a manager, which is different from being an executive or visionary."
Jobs' famous “Reality Distortion Field” was the ability to convince anyone of practically anything. His team achieved the impossible because he convinced them that it was possible.
Jobs made the team see their work as art and was obsessed with the design of invisible components like circuit boards. Craftsmanship had to be end-to-end. When the Macintosh was complete, he had the signatures of every team member engraved inside the Macintosh.
Most companies would ask designers to design cases according to engin